AT&T Banks on Compression

9/19/2008 8:00 PM Eastern

By: Todd Spangler

AT&T chief technology officer John Donovan stayed the course on the telco’s video-over-copper strategy, telling attendees at an investment conference here that more efficient MPEG-4 compression will allow it to boost the number of high-definition channels it can pipe into customers’ homes.

Donovan, speaking at the Goldman Sachs Communacopia Conference last week, said improvements in video-encoding equipment will allow AT&T to deliver three live HD streams in 2009.

The telco’s U-verse TV service currently delivers MPEG-4 video in the range of 6 to 8 Megabits per second. In first quarter 2009, Donovan said, AT&T expects to squeeze that down to 5 Mbps, and he added, “In the labs, we’re looking at technologies that take the compression further.”

Earlier this month, AT&T launched Total Home DVR, initially in San Francisco, which lets U-verse TV deliver five simultaneous HD streams: two live and three from the DVR.

Next year, with the compression enhancements, Donovan expects that to move to seven: three live and four recorded. Cable operators use the less-efficient MPEG-2 standard to deliver video. Donovan defended the video-over-DSL strategy, which AT&T executives contrasted with the more expensive path picked by Verizon Communications’ fiber-to-the-premises FiOS buildout.

“If you’re late [to market] and wrong, customers punish you,” he said. “If you’re early, you’re punished in a different way” by not attaining a return on investment.

He added that AT&T “feels comfortable” with its guidance on capital spending and said it’s focused in three areas: wireless, video and IP. “The explosive growth in mobility and video really drives us toward more IP techniques, not only for efficiencies but for integration.” he said.